Speaker 1: Welcome to the Bloomberg P and L Podcast. I'm Pim Fox.
Speaker 1: Along with my co host Lisa Abramowitz. Each day we
Speaker 1: bring you the most important, noteworthy, and useful interviews for
Speaker 1: you and your money, whether at the grocery store or
Speaker 1: the trading floor. Find the Bloomberg P L Podcast on iTunes,
Speaker 1: SoundCloud and at Bloomberg dot com. Investing in the retail
Speaker 1: market tricky, well, ask Scott rothbort. He is the president
Speaker 1: of Lakeview Asset Management. He joins us now and Scott,
Speaker 1: you've been a veteran coming on the program to give
Speaker 1: us your thoughts about the retail industry, the restaurant industry
Speaker 1: and so on. But well, I noticed that a lot
Speaker 1: of it has to do obviously with the consumer. And
Speaker 1: let's start off. Where do you think right now the
Speaker 1: consumers spending money and not spending money visa these these
Speaker 1: areas of the market. Well, I think the consumers spending
Speaker 1: money on a lot of household items. I think finally,
Speaker 1: consumers are after many years, are buying houses, fixing up houses. Look,
Speaker 1: you know they took a terrible hit in two thousand
Speaker 1: and two. A lot of people were displaced from their houses.
Speaker 1: But the market is coming back and people starting to
Speaker 1: buy durable goods, washing machines. Um. There they have been
Speaker 1: buying cars for all. I think that's that's beginning to
Speaker 1: kind of you know. Uh. And in terms of the
Speaker 1: surgeon in the purchase of of those items, the one
Speaker 1: the one area that that they continued to stay away
Speaker 1: from his apparel and and that is really been boggling
Speaker 1: a lot of investors and analysts because the apparel market
Speaker 1: continues to be UM, very difficult to invest in. UM.
Speaker 1: And of course what what invest what? What? What the
Speaker 1: consumers continues to invest in? Are these electronic gadgets, um,
Speaker 1: whether it's games, or it's smartphones or tablets. Uh. But
Speaker 1: wearables is a big market that is only going to
Speaker 1: expand in time. So UM, you invest money on behalf
Speaker 1: of wealthy individuals. You also are a professor at Seton
Speaker 1: Hall University, UM, looking at this environment. How do you
Speaker 1: determine where the opportunities are when there's such a macro
Speaker 1: overlay on this, not only from the consumer spending standpoint,
Speaker 1: but also from technological advancements. And how how quickly some
Speaker 1: of these even retailers have to catch up. Right, Well,
Speaker 1: there's a lot of disruptive events that are taking place
Speaker 1: in the retail markets. Okay, probably the one that people
Speaker 1: are most familiar with is online. Amazon is probably the
Speaker 1: most DISRUPTI development versus Walmart dot Com, Yes, versus everyone
Speaker 1: today Warren Buffett, you know, exiting more of his Walmart
Speaker 1: steak and it makes sense. Um, look I by Walmart. Uh,
Speaker 1: you know, I I look at Walmart for the dividend.
Speaker 1: I might buy it if it came down a little
Speaker 1: bit for our dividend strategy, because it meets some of
Speaker 1: the criteria for our different strategy in terms of growth.
Speaker 1: Is no growth in Walmart. Um. So, so we have
Speaker 1: Amazon is one of the disrupt dividend just a fair
Speaker 1: two point percent prices seventy bucks a share, right, yes,
Speaker 1: and and and and I'd rather see that dividend close
Speaker 1: to three percent, but a two point percent it's beating
Speaker 1: the SNP average divent which is just around two percent,
Speaker 1: maybe even slightly less than that right now. Although you
Speaker 1: have treasure yields rising, So if you just want the dividend,
Speaker 1: you can just invest in a tenure treasury and get
Speaker 1: three percent. You could, but then you won't get the
Speaker 1: benefit of economic growth. Um. And if you invest in
Speaker 1: the tenure treasure, you'll be locked into that for the
Speaker 1: next ten years. And if you need to take your
Speaker 1: money out of that treasury's interest rates rise, you're gonna
Speaker 1: wind up as a lot of people are learning that
Speaker 1: the price of bonds can go down. All right, So
Speaker 1: let's go some names. All right, let's go through some names. Right,
Speaker 1: So Walmart you like for the dividend? Who else? Let's
Speaker 1: go to I was thinking Sonic years of the three
Speaker 1: years I think of that. That's that's okay. So yeah,
Speaker 1: um look, you know we we we run a restaurant portfolio. Um,
Speaker 1: the name that always comes up is Chipalti. What's going
Speaker 1: on with what happened? But you know Chipalte has lost
Speaker 1: its way. Um I put Chipaldi in in in in
Speaker 1: the penalty box. After they had all these problems in
Speaker 1: terms of uh, you know, the diseases that people were
Speaker 1: getting but eating there, but and and and the CEO
Speaker 1: came out yesterday and said, look, we're just not providing
Speaker 1: the type of service that is consummate with what people
Speaker 1: are expecting from us. But this is the company that's
Speaker 1: lost its way. Now I'm gonna be very cynical with him.
Speaker 1: About to say stocks down's going lower? Right? Um? I
Speaker 1: mean you know they're they're they're starting to develop these
Speaker 1: smaller concepts like shop House, which is an Asian fusion concept,
Speaker 1: a pizzeria concept. Uh. And now they're gonna going to
Speaker 1: the burger market. Um. And I'm telling to myself, why, um,
Speaker 1: why are they doing all this? Why are you going
Speaker 1: into the pizza and burger market, two of the most
Speaker 1: saturated markets out there. You know, what what edge does
Speaker 1: chappolt they have? And in the meantime, I look at
Speaker 1: the Chapulti restaurants itself, and the menu hasn't changed in years.
Speaker 1: You know, Pim and I we've talked about McDonald's at nauseam.
Speaker 1: I think, and what helped McDonald's from two thousand and
Speaker 1: three to two thousand and thirteen was that they changed
Speaker 1: the menu. They didn't mind taking with what they did
Speaker 1: the McCafe and then they're even now trying to retransition
Speaker 1: the roll it out. It's independent like. But but I
Speaker 1: think Chapolty, um, they need to take a second look.
Speaker 1: And I know that that they talked about food with integrity,
Speaker 1: But the problem with Chapulti is that, um that's coming
Speaker 1: around to haunt them right now. Um, one of the
Speaker 1: fastest growing menu items if you go to restaurants UM
Speaker 1: is fish tacos, so I said a long time ago
Speaker 1: on on this program. As a matter of fact, you
Speaker 1: know what all for a fish. So for Chipotle, the
Speaker 1: fish tackle will be the egg McMuffin for McDonald. Scott Rothbert,
Speaker 1: thank you so much for being with us. Scott Rothbert,
Speaker 1: President and founder of Lakeview Asset Management, uh PIM FOX.
Speaker 1: We have been talking a lot today about the drop
Speaker 1: in biotech shares, the end of the uh fervor in
Speaker 1: the wake of Donald Trump's election as the next US president.
Speaker 1: Somebody who has been predicting this for weeks now is
Speaker 1: Max Neeson of Bloomberg Gadfly, and we are lucky enough
Speaker 1: to have him in studio with us to talk a
Speaker 1: little bit about whether this is just the beginning of
Speaker 1: a sell off or or whether you know what we
Speaker 1: can glean from today. So Max, thanks so much for
Speaker 1: joining us. So can you just set the set the
Speaker 1: backdrop here? It was a tweet by Trump. Yeah, of course,
Speaker 1: thanks so much for having me. So what happened is.
Speaker 1: In an interview with Time, Trump was quoted as saying
Speaker 1: I'm going to bring down drug prices. I don't like
Speaker 1: what's happened with drug prices. So I think this is
Speaker 1: really a bit of a return to reality for the sector,
Speaker 1: which had something of a rally in the aftermath of
Speaker 1: Trump selection. There's kind of this blanket assumption that Trump
Speaker 1: is better than Clinton. Um more Leanian drug pricing policy,
Speaker 1: fewer nasty tweets about price hikes. They kind of expected.
Speaker 1: Trump to government is a kind of adoption of Republican Well,
Speaker 1: lo and behold, he's a populist. People hate high drug
Speaker 1: prices and they hate drug price hikes, so it's not
Speaker 1: all that surprising to me that he would kind of
Speaker 1: pick up on this as an issue to kind of
Speaker 1: make a run at Fiser down two and a half percent,
Speaker 1: ab Vied down three and a half percent, Bristol Myers
Speaker 1: squib down two and a half percent, Eli Lily down
Speaker 1: one and a half. I could keep going Mark down
Speaker 1: to Johnson and Johnson down. Is this a buying opportunity? Um,
Speaker 1: you know, I'm not sure that it is, because even
Speaker 1: those big names that you mentioned, well, they haven't done
Speaker 1: the sort of extreme price hiking that you saw from
Speaker 1: kind of more notorious form firms like Valiant, they do
Speaker 1: to some extent rely on your kind of annual bi
Speaker 1: annual ten or more percent price hikes on some of
Speaker 1: their older drugs as they try to kind of fill
Speaker 1: in the gaps in their research pipelines. So there's kind
Speaker 1: of a fundamental drug pressure drug pricing pressure even beyond
Speaker 1: what you're seeing from you know, rhetorically or potentially on
Speaker 1: the policy side, as a pharmacy benefit managers get more
Speaker 1: aggressive about leavering competition and negotiating price prices down on drugs,
Speaker 1: so that there's really fundamental pressure, it's not just noise.
Speaker 1: I think President elect Trump is one thing, and it's
Speaker 1: unclear how much exactly he'll have his hands in the
Speaker 1: day to day policies that govern drug pricing. But we
Speaker 1: do know that Dr Tom Price, Georgia Republican representative is
Speaker 1: going to be the head of the Department of Health
Speaker 1: and Human Services. Barring something unexpected, do we have a
Speaker 1: sense of what his policy is with respect to drug pricing.
Speaker 1: So I think it would be a bit more of
Speaker 1: a surprise if he was particularly aggressive on the policy front.
Speaker 1: And that's really the big question right now. If Trump's
Speaker 1: comments today actually feed through into his administration's policy or
Speaker 1: into how he directs price and UM, you know, it's
Speaker 1: a little bit hard to imagine that the Senate lawmakers
Speaker 1: and Price or something going to reverse course and really
Speaker 1: aggressively start to legislate on drug prices, or for Trump
Speaker 1: to join hands with Senate Democrats to do something about it.
Speaker 1: But I think something that we've really learned over the
Speaker 1: course of this campaign in the past years that it
Speaker 1: doesn't necessarily take concrete policy action to drive down the
Speaker 1: prices of these shares. All it takes is a tweet.
Speaker 1: Also takes is this kind of common and I think
Speaker 1: if we see more of this over the next few years,
Speaker 1: this sense of uncertainty, the sense that you might pop
Speaker 1: off at any point, I don't think it will necessarily
Speaker 1: matter quite so much that that price has not been
Speaker 1: an outspoken critic of drug prices. Um. Is there a
Speaker 1: particular company, biopharmaceutical company that will suffer the most from
Speaker 1: potential restrictions of of drug price heights? Um. I think
Speaker 1: it's pretty broadly based because everyone's exposed. You've got these
Speaker 1: big companies like Fiser that high prices on their older drugs,
Speaker 1: and you've got new companies that are hoping to set
Speaker 1: their prices really high when they actually hit the market. Um.
Speaker 1: And then you've got companies with drugs on the market
Speaker 1: that are seeing the uptake of their drugs restricted basically,
Speaker 1: and the really unfortunate tradeoff when it comes to lowering
Speaker 1: drug prices. If you want to lower prices, you have
Speaker 1: to lower access for people. If everyone can get all
Speaker 1: the drugs they want, um, and you don't put any
Speaker 1: restrictions in place, it becomes really hard to enforce any
Speaker 1: lower drug prices. So I think it's really going to
Speaker 1: be a broad based issue. Can I take you down
Speaker 1: to the health insurance industry for just a second and
Speaker 1: absolute get me, get to get us all your thoughts there,
Speaker 1: because I'm just looking for example, that Humana shares it
Speaker 1: down about one and a quarter percent. Who benefits? Then?
Speaker 1: I mean, is it? Is it the insurance companies? What
Speaker 1: about them? Um? They might see some benefit from lower
Speaker 1: prices if they get a bit more power to push
Speaker 1: for rebates or generally start to pay less for drugs,
Speaker 1: that's good. But in a broader sense for insurers, I
Speaker 1: think this is just a This is a case where
Speaker 1: it might be a buying opportunities to general sell off
Speaker 1: in healthcare stalks. Nothing in particular that would indicate that
Speaker 1: this has any negative read through to insures um. You know, Max,
Speaker 1: something that you were talking about, the fact that shares
Speaker 1: would drop so much and so uniformly on one Twitter
Speaker 1: post is indicative in and of itself, and I think
Speaker 1: that that's an important point. I mean, biotech was accused
Speaker 1: back in two thousand fifteen of being in a bubble?
Speaker 1: Have the FED actually naming the biotech industry specifically? It
Speaker 1: has come down substantially since then, But does this sort
Speaker 1: of underscore how difficult it is to really place a
Speaker 1: value on some of these companies and how that's a
Speaker 1: problem for stock investors. I mean, it couldn't possibly be
Speaker 1: more difficult that. That's what's so much fun about the
Speaker 1: sector that there there's such a wide variety of things.
Speaker 1: I mean, you're you have companies they're placing you know,
Speaker 1: they're completely binary propositions. The trial is going to read
Speaker 1: out or won't. The drug will be commercially successful or
Speaker 1: you won't. And you're really making your best guests because
Speaker 1: you know, unless you're a trained scientists with particular insight
Speaker 1: into a company's drug candidate. You know, you're you're really
Speaker 1: kind of making a broadcast. So it's it's really risking
Speaker 1: a bet on the sector. It's just such a kind
Speaker 1: of a risk on move that you know, we we
Speaker 1: think this is gonna go well, or there's gonna be
Speaker 1: a broad policy which it's gonna help these things. So
Speaker 1: anything negative um really has a disproportionate effect. And I
Speaker 1: think we're seeing that today and I've seen that through
Speaker 1: at the year. Any any hope for these investors, I mean,
Speaker 1: just get out now. I think there is some hope
Speaker 1: that you know, this is probably a bit of you know,
Speaker 1: you know, so this thing we thought was, yeah, that
Speaker 1: the GOP was gonna you know, the Trump and the
Speaker 1: GUP we're gonna be way more friendly. Now it might not.
Speaker 1: Everyone kind of panics, but it might um in the
Speaker 1: Great Trunk tradition be be all words and no actions.
Speaker 1: So that's something definitely to watch out for. And if
Speaker 1: you're an optimist to maybe bet on well. And also
Speaker 1: if you're a chief executive, just be aware that you're
Speaker 1: going to be kept on your toes. I guess with
Speaker 1: this barrage of communication via tweet. Yeah, and then as
Speaker 1: biotech index is down more than since the peak last
Speaker 1: year on July fifteen. Something to note, Max Neeson, thanks
Speaker 1: very much for coming in and sharing all your knowledge
Speaker 1: with as always some pleasure. Max Neison expert when it
Speaker 1: comes to pharmaceuticals, healthcare and all things science from us
Speaker 1: here at Bloomberg. Taking a look. In North Dakota, there's
Speaker 1: been an ongoing confrontation between protesters and law enforcement over
Speaker 1: the Dakota Access Pipeline. Sunday, the U. S. Army Corps
Speaker 1: of Engineers, the direction of Obama and his administration. President
Speaker 1: Obama said that it would refuse to grant the final
Speaker 1: permit needed to complete the three point eight billion dollar project.
Speaker 1: I want to bring in Brandon Barnes. He's senior litigation
Speaker 1: analyst for Energy at Bloomberg Intelligence, coming to us from Washington,
Speaker 1: d C. Brandon, isn't likely that the Dakota Access Pipelines
Speaker 1: owners could overturn this refusal in short order. In other words,
Speaker 1: how big is the hurdle for them to now move
Speaker 1: forward with this project? Well, it's their pathways have changed
Speaker 1: a little bit. Now they're kind of down to two.
Speaker 1: So they've got one in the courtroom, which has been
Speaker 1: ongoing since the tribes actually sued Army Corps earlier in
Speaker 1: the year, and that continues. There's a status conference coming
Speaker 1: up at the end of this week. They also have
Speaker 1: the opportunity, potentially, if President elect Trump wants to reverse
Speaker 1: the decision on the Army Corps, for him to influence
Speaker 1: that decision and revisit that once he's in office. Now,
Speaker 1: let's just set this scene here. This is bachan shale
Speaker 1: oil that is going or the plan is to pipe
Speaker 1: it underneath the Mississippi River. Correct, that's okay, And there
Speaker 1: are already pipelines underneath the Mississippi River in the vicinity
Speaker 1: of where they have cited this Dakota pipeline. That's right.
Speaker 1: They'd be running parallel to an existing natural gas pipeline.
Speaker 1: So if it would be running in parallel to an
Speaker 1: existing natural gas pipeline, why has this become such a
Speaker 1: big issue? As am I I was just reading, by
Speaker 1: the way, op ed piece in the Walster Journal by
Speaker 1: the Congressman Cramer Kevin Kramer of he's a Republican from
Speaker 1: North Dakota. He says it doesn't even touch tribal land.
Speaker 1: That's right. It's so there are a lot of different
Speaker 1: conceptions flowing out there, and and a lot of them
Speaker 1: are misconceptions. So the threat here from crude is different
Speaker 1: than what you would have from natural gas if it
Speaker 1: were to leak out of a pipeline, because natural gas
Speaker 1: dissipates relatively quickly when it hits water. So, um, this
Speaker 1: is all about water worries and those who are downstream
Speaker 1: of this pipeline crossing, which would be the Standing Rock
Speaker 1: tribe and others. Um, So what what is this dispute
Speaker 1: really about? Well, it depends whether you're on the ground
Speaker 1: with the protesters and sort of the more celebrity aspect
Speaker 1: with the public, or if you're in the courtroom, because
Speaker 1: I think once it boils down to the legal fight
Speaker 1: is this is whether the tribe actually can come in
Speaker 1: and assert some of these issues in front of a
Speaker 1: court when it's not actually crossing their land, and to
Speaker 1: what extent Army Corps has authority to move the pieces
Speaker 1: around once it appears that they've already made their decisions. So,
Speaker 1: in other words, do they have standing? Do they have
Speaker 1: standing to even block this well? And then and do
Speaker 1: they have the kind of claims without the crew actually
Speaker 1: leaking to come in and ask the court to do
Speaker 1: something right to forestall something that may or may not
Speaker 1: happen in the future exactly. The question then to you
Speaker 1: is do they already have other legal actions against the
Speaker 1: pipeline operators because that are already upstream from that water supply,
Speaker 1: Because it seems as though you've got refined product, as
Speaker 1: you said, gas transmission lines and so on. Isn't that
Speaker 1: all upstream of the water. Yes, certainly they've and there
Speaker 1: have been fights over water and water withdrawals in the
Speaker 1: past related to to these reservations, to these reservations and
Speaker 1: these tribes. But this UM, you know, this is sort
Speaker 1: of the first concerned effort we've seen from UM from
Speaker 1: one of the tribes in the Middle West and in
Speaker 1: that area where most of the opposition we've seen has
Speaker 1: come out of the northeast. Interesting. So, just based on
Speaker 1: the legal issues standing UM, what do legal experts give
Speaker 1: as far as the chances that this will keep going
Speaker 1: through and it will be a reality. Well, if we're
Speaker 1: talking about just the courts, UM E. T p UH
Speaker 1: and and Dakota Access the project have filed a motion
Speaker 1: for summery in judgment, which is basically emotion and the
Speaker 1: case on just the legal aspects of it. And they
Speaker 1: have a pretty good argument that Army Corps has in
Speaker 1: effect constructively already issued this easement based on everything they've
Speaker 1: already said and the decisions they've reached on other permits
Speaker 1: um And so I think that the odds right now
Speaker 1: favorite et P and the and the project in the courts.
Speaker 1: Brendan Barnes, thank you very much as senior litigation analyst
Speaker 1: for Bloomberg Intelligence. All Right, when we want results when
Speaker 1: it comes to technology and the confluence of money and technology,
Speaker 1: we turn. We turned to Shira ov Day and she
Speaker 1: is our Bloomberg Gadfly columnist and joins us now in studio.
Speaker 1: Great to see you as always here. Thanks for being here.
Speaker 1: I want you to just dial back the news cycle
Speaker 1: for just a moment and tell us what you believe
Speaker 1: or what we know about a meeting between President elect
Speaker 1: Donald Trump and mash Yoshi San who is the founder
Speaker 1: of soft Bank, which happens to also I believe, be
Speaker 1: the majority show shareholder controlling interest in Sprint. That's right,
Speaker 1: So the two met yesterday and Trump Tower during this
Speaker 1: you know, endless series of Trump e meetings and afterwards,
Speaker 1: Donald Trump tweeted that Muscle Son committed to investing fifty
Speaker 1: billion dollars in the United States and to creating fifty
Speaker 1: thousand jobs in this country. Did massa Son edify or
Speaker 1: or sort of confirm President Elected Trump's tweets? So, like
Speaker 1: most political policy statements given in a hundred and forty
Speaker 1: character bursts, uh, this one from Donald Trump has um
Speaker 1: lots of bogus elements. So let's take the fifty billion
Speaker 1: dollar number first. So massa Son confirmed later that the
Speaker 1: fifty billion dollar figure was basically a reference to a
Speaker 1: pre existing announcement that they he and others made in
Speaker 1: earlier this fall about a hundred billion dollar investment fund
Speaker 1: in startups around the world includes money from Saudi Arabia.
Speaker 1: For correct, includes money from Saudi Arabia. In fact, the
Speaker 1: majority of money and that fund is not from soft
Speaker 1: Bank itself, but from Saudi Arabia and others. So the
Speaker 1: fifty billion figure seems merely to be confirming that they'll
Speaker 1: spend half or so of that hundred billion dollar fund
Speaker 1: in the United States, which natural given the prevalence of
Speaker 1: the tech industry here in the U. Okay, but I
Speaker 1: mean it is true or or it is at least
Speaker 1: possible in the way that possibly it is possibly it
Speaker 1: is possibly true, yes, which is you know, not not nothing,
Speaker 1: although again I don't know that Trump can claim credit
Speaker 1: for that. Fifty is correct. Well, Talking just more broadly
Speaker 1: about President elect Trump's engagement with the tech industry, He's
Speaker 1: holding a meeting with a lot of tech executives. Um,
Speaker 1: are we getting any hints of what different sides are
Speaker 1: hoping will come of that? It should be very interesting
Speaker 1: to see what happens when the tech community and Trump
Speaker 1: get together. This is a technology as an industry that
Speaker 1: maybe more than any other, was horrified by the election
Speaker 1: of Donald Trump. You know, they sort of felt both
Speaker 1: politically and culturally that Trump does not stand for what
Speaker 1: they believe The tech industry stands for. A lot of
Speaker 1: them a posed Trump's campaign publicly with their checkbooks also,
Speaker 1: so it'll really be interesting public in his support of
Speaker 1: former Secretary of State Hillary Clintons, as I recall, I
Speaker 1: want to just get thoughts just a little bit more
Speaker 1: on Sprint, you know, connected with a soft bank Sprint
Speaker 1: shares after that was announced in the tweet, I guess
Speaker 1: up one and a half percent. Uh, Now you've got
Speaker 1: the shares are up about six percent, So clearly somebody
Speaker 1: believes that there is a value in having the ear
Speaker 1: of the president elect. That's exactly right. So the issue
Speaker 1: here is that Muscleson has made no secret of his
Speaker 1: desire to merge Sprint with T Mobile to mobile companies
Speaker 1: that under the Obama administration that has not been possible
Speaker 1: for regulatory reasons. So the hopes are that with this
Speaker 1: new administration in Washington soon can finally make that merger,
Speaker 1: which would probably lead to significant savings at Sprint um
Speaker 1: ironically probably via I think in job losses, and it
Speaker 1: would be something based maybe on your reporting that John Ledger,
Speaker 1: the chief executive T Mobile, has already entertained let's say, Yeah,
Speaker 1: I think probably there's desire on the part of both
Speaker 1: Sprint and T Mobile to do that merger if regulators
Speaker 1: would allow it. That's just so fascinating and would would
Speaker 1: would President elect Trump, you know, latterly be able to
Speaker 1: sort of see that thing through. Yeah, I mean, it's
Speaker 1: hard to know, right, These are decisions that are made
Speaker 1: by regulatory bodies, not the White House. But obviously the
Speaker 1: President of the United States has control over who runs
Speaker 1: federal agencies like the FCC just just to switch topics
Speaker 1: is a little bit. Since we have you here, Verizon
Speaker 1: announced yesterday that it plans to sell twenty nine of
Speaker 1: its data centers for three point six billion dollars. And
Speaker 1: typically when you hear data centers and this, you know,
Speaker 1: you sort of like your eyes glaze over and it's
Speaker 1: like we care why, um, but you made it really interesting.
Speaker 1: It depends for you. Are you wrote a story that
Speaker 1: had the most fantastically ever, here's a curse to hurl
Speaker 1: at your worst enemy. May you be forced to operate
Speaker 1: data centers? Why is it such a problem. Yes, it's
Speaker 1: a little bit ironic because nobody thinks about data centers.
Speaker 1: I agree with you. Great you cover tech and you
Speaker 1: can understand why people's eyes glaze over. I hear you.
Speaker 1: It is not uh, you know, jet packs and and
Speaker 1: drones delivering packages to your door. It is boring. But
Speaker 1: data centers are the essential components of everything we do online.
Speaker 1: These are you know, giant buildings packed with computer servers.
Speaker 1: Without them, we could not order an uber, or we
Speaker 1: cannot send an email. We could not do anything. The
Speaker 1: problem is the economics of the computer industry are changing
Speaker 1: to the point where Owning these essential engines of the
Speaker 1: digital age is an incredibly difficult business unless you are Google, Amazon, Facebook,
Speaker 1: and a handful of other rich tech companies. And Verizon
Speaker 1: found that out basically, and I believe at one point
Speaker 1: they were putting server farms in cold locations in order
Speaker 1: to save money and also to increase perform elements because
Speaker 1: it mattered. I mean, that is part of the innovation
Speaker 1: that the giant tech companies have brought to this business.
Speaker 1: That one of the biggest expenses of owning buildings packed
Speaker 1: with computer servers is that those servers get really, really
Speaker 1: hot from all the calculations they're doing. And it is
Speaker 1: cheaper if you put those buildings in cold weather locations
Speaker 1: where you pay less to cool down those buildings. You're
Speaker 1: talking Canada and Canada, Scandinavia, Oregon, right, and I think
Speaker 1: and just before we got to ask you the uh
Speaker 1: Qualcom Intel, I keep thinking Snapdragon for Qualcom because that's
Speaker 1: what goes in the mobile phone. But there's a different
Speaker 1: kind of chip. Yeah, this is this is a big deal,
Speaker 1: another one of these nerdy tech things that no one
Speaker 1: will care about, but it is incredibly important. So quality.
Speaker 1: Intel is the computer chip company that makes every personal
Speaker 1: computer chip and has basically on market share of the
Speaker 1: computer chips that go in those computer servers and data centers,
Speaker 1: and that's been a great business for Intel. Central thesis
Speaker 1: of investing in Intel is because of their dominance in
Speaker 1: these computer server chips. So Qualcom, which is Intel's big rival,
Speaker 1: said today, we have produced these chips for computer servers
Speaker 1: that at least in principle, are competitive with what Intel
Speaker 1: is doing, and that should be um A a big scare.
Speaker 1: Thanks for listening to the Bloomberg P and L podcast.
Speaker 1: You can subscribe and listen to interviews at iTunes, SoundCloud,
Speaker 1: or whatever podcast platform you prefer. I'm pim Fox. I'm
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